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To me, buying USDEUR looks the same as selling EURUSD. For those who have experience trading forex, are there circumstances when it makes more financial sense to buy USDEUR instead of sell EURUSD? Are these 2 actions always equivalent?

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The two are not equivalent in terms of net P/L.

If you take a bullish view of the dollar against the euro, then there are reasons to buy USDEUR rather than sell EURUSD.

For example, suppose you buy USDEUR at 0.87 and sell it at 0.90. Then your profit is proportional to (0.90 - 0.87)/0.87 ; that's a profit of approximately 3.45% basis contract size.

On the other hand, if you take the same position by selling EURUSD at 1/0.87 and then buying back at 1/.90, then your profit is proportional to (1/.87-1/.9)/(1/.87) ; that's a profit of approximately 3.33% basis contract size.

And conversely, if you take a bearish view of the dollar against the euro, then buying EURUSD makes more sense.

  • Thanks and upvoted. Seems like it always makes more financial sense to buy a currency pair than to sell it. – curious Jul 2 '17 at 1:38
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    @curious We should also note that if the trade goes wrong, the the loss will be slightly reduced if we had "sold the currency" to open. – Nick R Jul 2 '17 at 1:41
  • is there any difference between collecting interest on the currency when it comes to buying and selling a currency pair? – curious Jul 2 '17 at 1:43
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    @curious With forward dated foreign exchange contracts, the interest rate differentials are reflected in the fx rate. If you are talking about holding physical currency, then yes, interest rate differentials would impact on profitability. – Nick R Jul 2 '17 at 1:48
  • Is it even possible to trade USDEUR? A quick google suggests it's always EURUSD. – Ganesh Sittampalam Jul 2 '17 at 20:00

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